A buyer of goods purchased from a shipper currently has several options to pay for the goods, including for example, by cash, credit card, check, etc. In addition, the timing of the payment must also be agreed upon between the buyer and shipper, such as, for example, at the point of sale, within a predetermined billing cycle, etc. Included in these options is payment for the goods when they are received, commonly referred to as collect on delivery (or cash on delivery) and abbreviated C.O.D. Specifically, in a C.O.D. transaction, the buyer and shipper agree that the buyer will pay for the purchased goods, in full, immediately upon receipt by the buyer.
FIG. 1 illustrates in block diagram form an example of a conventional basic C.O.D. transaction process between a consignor/seller/shipper 12 (hereinafter referred to as shipper 12) and a consignee/buyer 14 (hereinafter referred to as buyer 14). While the example illustrated in FIG. 1 illustrates an international shipment, it should be understood that C.O.D. shipments may be both international or national. The buyer 14 places an order for goods with the shipper 12 in step (1), and in step (2) the terms of the sale are agreed to by the buyer 14. Under the C.O.D. payment option, the buyer 14 agrees to make payment simultaneously with the receipt of the shipment. The destination inland carrier 16 will be instructed to collect payment from the buyer 14 at the time of delivery. The payment instrument and currency are typically designated under the C.O.D. terms. Payment includes the charges for the goods, i.e., the purchase price, which can also include the transportation charges for shipment of the goods. Alternatively, the transportation charges can be billed separately from the purchase price, in which case the buyer 14 will be presented with more than one invoice.
Typically, the party paying for the transportation charges selects a freight forwarder 18 to orchestrate the shipping process. In this example, the transportation charges will be paid by the buyer 14 and billed separately from the purchase price of the goods. Accordingly, once the buyer 14 has informed the shipper 12 of the desired freight forwarder 18, in step (3) the shipper 12 contacts the freight forwarder 18 to arrange for the shipment of the goods to the buyer 14. In step (4) the freight forwarder 18 coordinates shipment and payment for shipment with various participants, typically one or more carriers. The participants include, for example, an origination inland carrier 20, a long haul carrier 22, such as, for example, an air cargo carrier for international shipments, and the destination inland carrier 16. It should be understood that there may be other participants as well, such as, for example, a consolidator, terminal handlers and a de-consolidator. Thus, the freight forwarder 18 will schedule with the origination inland carrier 20 the physical pick-up of the shipment and associated documentation (bill of lading, commercial invoice, etc.) from the shipper 12, delivery to long haul carrier 22, and subsequent delivery to the destination inland carrier 16. Of course, the shipment could also be palletized for consolidation (by a consolidator) with other shipments before being delivered to the origination inland carrier 20 or long haul carrier 22. In step (5), which of course may be concurrent with step (4), the shipment moves through the transportation chain system.
Upon arrival of the shipment and customs clearance in the destination country (for international shipments), the shipment is made available for pick-up by the destination inland carrier 16 for delivery to the buyer 14. Of course, if the shipment was palletized, it must first be broken down into the individual shipments for final delivery (by a de-consolidator). In step (6), the destination inland carrier 16 physically delivers the shipment to the buyer 14, along with the shipper's 12 C.O.D. purchase invoice, and, since transportation expenses are being paid by the buyer 14 in this example and billed separately from the purchase price, the C.O.D. transportation invoice(s). Typically, the buyer 14 will present separate payment instruments to the destination carrier for payment of each of the invoices in step (7). If the payment instruments are checks, the check(s) to cover transportation expenses is/are made payable to the freight forwarder 18, while the check to cover the purchase invoice is made payable to the shipper 12. The destination inland carrier 16 must perform the necessary due diligence to ensure that the payment instruments as presented conform to the C.O.D. terms.
In step (8), the destination carrier 16 provides the freight forwarder 18 with the check(s) associated with the C.O.D. transportation invoice(s), and the freight forwarder 18 will settle with the appropriate parties as applicable, i.e., the origination inland carrier 20, long haul carrier 22 and/or destination inland carrier 16. It should be noted, of course, that the freight forwarder 18, origination inland carrier 20, long haul carrier 22 and destination inland carrier 16 may not be separate entities, but instead all of them or any combination could be the same entity. Additionally, it should be noted that while the example illustrated in FIG. 1 utilizes a long haul carrier 22, shipments can also be made utilizing only a single inland carrier. In many situations, especially for domestic shipments, the origination inland carrier 20, freight forwarder 18 and destination inland carrier 16 will be the same entity. In step (9), which may be concurrent with or even before step (8), the destination inland carrier 16 provides the shipper 12 with the check(s) associated with the C.O.D. purchase invoice(s), thus completing the C.O.D. transaction.
There are problems, however, with the conventional system for paying for goods C.O.D. For example, there is a large amount of liability imposed on the carriers under the current system, and especially on the destination inland carrier 16. When the destination inland carrier 16 accepts the responsibility of delivering the shipment to the buyer 14 under the terms of C.O.D. (step (6) of FIG. 1), the destination inland carrier 16 is also responsible for collection of payment from the buyer 14 to the shipper 12, and may also be responsible for collection of payment from the buyer 14 for transportation charges if the transportation charges are being paid by the buyer 14. Thus, as noted above, it is the responsibility of the destination inland carrier 16 to ensure that payment by the buyer 14 is proper. For example, the destination inland carrier 16 must ensure that any checks presented for payment conform to the C.O.D. terms and will be honored when presented to the financial institution upon which they are drawn. If the payment tendered by the buyer 14 is not acceptable or not honored for any reason, the destination inland carrier 16 is liable to the shipper 12 for the cost of the goods. In addition, during the time each of the carriers has physical possession of the goods, they are liable for any damage to the goods, thereby further increasing the amount of liability imposed upon the carriers. Thus, many carriers are hesitant to provide service for C.O.D. shipments because of the liability imposed upon them, thereby limiting commerce between shippers and buyers.
Thus, there exists a need for a trusted payment system and method that reduces the liability imposed upon carriers for delivery of C.O.D. shipments by providing assurance of payment upon receipt of the goods.